Manufacturing, as a key pillar in the Big Four Agenda for the country, means that local sourcing towards the growth of the sector and the consequent provision of jobs to Kenyan citizens cannot be understated.
In an endeavor to grow the sector at 35 percent per year to achieve the desired 15 percent GDP contribution by 2022, the Kenya Association of Manufacturers (KAM) has stated that the Buy Kenya Build Kenya Strategy should be rigorous and should prevail for both the short and medium term especially for products that can easily be manufactured within the country.
A statement from KAM disclosed that as the largest procurement entity in the country, the Government, where possible, ought to direct its spending on locally manufactured goods with a view of supporting the Big Four Agenda.
“Currently, the manufacturing sector’s contribution to the GDP is 8.3 percent, with a registered growth of 0.2 percent growth in 2017. Favouring imports over local content, as seen in the recent importation of 64 Bus Rapid Transport (BRT) buses, bypassing our local bus assemblers and bodybuilders, goes against the agenda to boost the sector’s ability to provide employment locally and increase its GDP contribution towards the country’s economic goals,” read part of the statement.
The Association had a number of recommendations which stated that the Local Vehicle Assemblers had a production capacity of 34,000 units per annum, which makes them capable of producing the required number of high occupancy buses for the project.
“It is also worth noting that engaging local assemblers to deliver these buses means a shorter lead-time for delivery when compared with those being imported. Additionally, locally assembled buses have been tested and proven in the Kenyan market, where they are known for their durability and low maintenance cost. Local engineers have the knowledge to design and engineer these buses for local operating conditions,” read the statement.
According to KAM, a well-established aftersales network for parts, maintenance, service, and repairs for local buses already exists to ensure the success of the BRT system thus the need to consider that many apprentices locally will be trained under the project in order to sustain an up-to-date, functional system.
The Association further reiterated that the local bus Complete Knock Down (CKD) kits attract 0 percent import duty and excise duty, in which case the local buses would be more affordable than imported buses-which would attract 25 percent import duty and 30 percent excise duty.
At the moment, Kenya is a twin deficit economy. This means it has both fiscal and current account deficits. A current account deficit occurs when a country imports more than it exports. Clearly, importation of the BRT vehicles risks exacerbating the current account deficit which has been worsening over the years, as well as, stifling Government’s efforts to industrialize under the Big Four Agenda.
“If we are to realize the desired goals in the Big 4 Agenda, it has to be demonstrated through commitment to the 40 percent local content procurement regulation, especially in critical infrastructural projects and decisions. This will, in turn, encourage further investments in the sector by both local and foreign investors, increasing government revenue and more importantly offering productive jobs,” said KAM.